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The Sinocism China Newsletter 07.25.16

"Sinocism is the Presidential Daily Brief for China hands"- Evan Osnos, New Yorker Correspondent and National Book Award Winner

I am on the road again tomorrow for most of the next three weeks, including ten days back in the PRC with VPNs that have not been tested in several months. The newsletter will be very sporadic between now and August 15th and may not come out at all. As always, you can follow me on Twitter @niubi for more frequent updates.

I hope wherever you are is cooler than Washington DC is this week.

THE ESSENTIAL EIGHT

1.China Focus: Xi calls on China, U.S. to respect each other’s core interests – Xinhua President Xi Jinping on Monday called on China and the United States to effectively manage their differences and respect each other’s core interests. Xi made the remarks when meeting with U.S. National Security Advisor Susan Rice at the Great Hall of the People in Beijing. China-U.S. common interests outweigh their differences, Xi said, noting that both sides needed more mutual trust and cooperation. // Has the US ever articulated a set of “core interests” to the PRC? If so, what are they?

Related:Statement by NSC Spokesperson Ned Price on National Security Advisor Susan E. Rice’s Meetings in Beijing, China | whitehouse.gov In Ambassador Rice’s fruitful meeting with President Xi, they noted with satisfaction the substantial progress in the development of bilateral relations through deepened cooperation in areas of overlapping interest and agreed on the value of forthright and constructive management of our differences. Ambassador Rice affirmed that the United States is committed to deepening our bilateral relationship, including through the President’s visit in September. // wonder what “fruitful” meeting with Xi means

Related:习近平会见美国总统国家安全事务助理CCTV节目官网-CCTV-1央视网(cctv.com) 习近平指出，过去3年来，我同奥巴马总统多次会晤，达成诸多重要共识。特别是我们决定共同努力构建中美新型大国关系，推动两国关系取得许多实实在在的成果。中方高度重视中美关系，愿同美方一道努力，牢牢把握两国关系发展大方向，坚持不冲突不对抗、相互尊重、合作共赢的原则，增进互信，深化合作，以建设性方式管控分歧，推动中美关系持续稳定发展。// Xi-Rice meeting was top item on the July 25 CCTV Evening News. Has Jim Brown finally retired as the top US interpreter? Who is doing the interpreting for Rice?

Related:U.S. praises confidence-building measures with Chinese military | Reuters Visiting U.S. National Security Adviser Susan Rice said confidence-building measures had reduced risks and the United States valued progress in improving military-to-military ties. “Our military leaders communicate more frequently and more directly than ever before in the past,” Rice said in a meeting with a vice chairman of China’s powerful Central Military Commission, Fan Changlong. “While our forces operate in closer proximity to each other, the risk of unintended consequences has gone down thanks to the confidence-building measures that our two sides have put in place.”

2.Guo Boxiong, Ex-Top Military Official in China, Gets Life Sentence for Graft – The New York Times Guo Boxiong, the most senior Chinese military commander ever tried for corruption, was sentenced on Monday to life in prison after a military court found him guilty of taking “huge” amounts in bribes in return for giving military promotions and transfers. General Guo rose as high in the People’s Liberation Army as a career military officer can go, serving as a vice chairman of the Central Military Commission for a decade until 2012, when he retired.// who is next? noteworthy no one has been executed in Xi’s corruption crackdown; the sums would allow it in some of the cases, including this one, and especially under military discipline

Related:China Headlines: Guo Boxiong gets life sentence for taking bribes – Xinhua Guo’s bribes were “extremely huge” and his crimes were “extremely serious,” however, he confessed, owned up to his misdeeds, repented in good faith, and all the proceeds of his crimes have been recovered, the statement read. The court carried out a closed trial as military secrets were involved. The trial has been conducted in a fair and independent manner, and its verdict could be tested by the law and time, said the statement.

3.China Clamps Down on Online News Reporting – The New York Times Sun Xuyang, a former investigative reporter for Beijing News and Southern Metropolis Daily, was more pessimistic, saying by telephone that Monday’s announcement was a signal that the space for original reporting was being eroded. “There are no more illusions,” Mr. Sun said. The news sites targeted by the Cyberspace Administration include Sina’s “News Geek,” which this month published a story, later deleted, about a chemical contamination at a Beijing school, and “Landmark,” run by NetEase, that last year scooped the official news media in reporting the arrest of the brother-in-law of a jailed former top official.

4.Assessing ASEAN’s South China Sea Position in its Post-Ruling Statement | The Diplomat Before taking ASEAN to task on what was missing, it is also important to evaluate the regional grouping in perspective. For example, it must be stressed that although several media outlets have already begun noting that the statement did not mention China or the ruling, this is a somewhat unreasonable standard. It is not traditional practice for ASEAN to mention China by name in the South China Sea language of a general joint communique (as opposed to a statement to be issued at a meeting like in Yuxi, which did mention Beijing directly). And noting specific events like the ruling would be more likely in a separate statement as opposed to the usual joint communique. Where the organization does deserve scrutiny regarding the statement is the fact that language on ASEAN’s commitment to principles was watered down and there was no mention of respect for legal and diplomatic processes – seen as a way to generally reference the ruling without directly doing so. While the Yuxi non-statement referenced “ASEAN’s commitment” to certain principles, the AMM statement ends up only “reaffirming the need” for them, which reads like a slightly less firm formulation. More consequentially, while both the US-ASEAN Sunnylands Summit statement and the Yuxi non-statement contained the phrase “full respect for legal and diplomatic processes” within a list of principles, this phrasing was removed in its entirety from the AMM statement

Related:China, ASEAN vow to promote peace, stability in South China Sea – Xinhua A joint statement was issued after the meeting between Chinese Foreign Minister Wang Yi and his counterparts from 10 ASEAN members in the Lao capital during the 49th ASEAN Foreign Ministers Meeting. The countries recognize that “maintaining peace and stability in the South China Sea region serves the fundamental interests of ASEAN member states and China as well as the international community.” They are also committed to the full and effective implementation of the Declaration on the Conduct of Parties in the South China Sea (DOC) and working substantively toward the early adoption of a Code of Conduct (COC) based on consensus.

5.UK explores multi-billion pound free trade deal with China – BBC News Chancellor Philip Hammond has begun discussions with China on an ambitious free trade deal which could see greater access for major Chinese banks and businesses to the UK economy. The Chancellor told the BBC it was time to explore “new opportunities” across the world, including with China, one of the UK’s biggest inward investors.

6.Sinica Podcast: Whose century is it, anyway? This live recording of Sinica at the Smyth Hotel in New York City on July 13 features the journalists Mary Kay Magistad and Gady Epstein discussing the increasingly complex “frenemyship” of China and the United States. They also talk about the South China Sea, the role of “old China hands,” and how the Middle Kingdom is changing the world and being changed by it. The title of the episode is taken from Mary Kay’s radio show and podcast, Whose Century Is it?// I think I count as one of those people now “inside the beltway” whose views have changed. Had I been on the show I would have again emphasized the point that people need to pay far more attention to the revival of the Communist Party under Xi and its impact on how the PRC conducts itself domestically and politically…still surprised by how many people seem to elide over the Party and Xi’s attempts at restoring it to its full glory

7.Are China’s Most Extreme Nationalists Actually Foreign Stooges? | Foreign Policy That’s not just because China’s government fears nationalist protests might interfere with its foreign-policy making. It’s also because of a widely held suspicion that China’s wildest, most demonstrative nationalist protesters are actually anti-government activists in disguise. An article published July 16 on the Weibo account of the Communist Youth League, the ruling party’s key youth organization, offers a primer on this bizarre but surprisingly popular conspiracy theory. The article, titled “Life’s-a-game memes and the hijacking of youth patriotism by ‘crazy uncles’” (more on that later), argues that much of the extreme nationalist outbursts within China are in fact the work of those engaged in gaojihei, which roughly translates to “high-level smearing” of good Chinese patriots by anti-party elements. The article, which has been read more than 2.6 million times, suggests that counterfeit patriots affect an exaggerated and ridiculous nationalism in order to critique party ideology through parody, blacken the name of true patriots, foment domestic chaos that risks destabilizing party rule, and even to use public opinion to push the government into a war that would have disastrous consequences for the party.

8. Chinese scientists to pioneer first human CRISPR trial : Nature Chinese scientists are on the verge of being first in the world to inject people with cells modified using the CRISPR–Cas9 gene-editing technique. A team led by Lu You, an oncologist at Sichuan University’s West China Hospital in Chengdu, plans to start testing such cells in people with lung cancer next month. The clinical trial received ethical approval from the hospital’s review board on 6 July. “It’s an exciting step forward,” says Carl June, a clinical researcher in immunotherapy at the University of Pennsylvania in Philadelphia.

BUSINESS, ECONOMY AND TRADE

Chinese Students in the U.S. Fear the Yuan’s Fall – – WSJ Despite the crackdown on underground currency markets and heightened enforcement of the $50,000 annual cap that each individual in China is allowed to buy, students have found various ways to circumvent the restrictions. A math student at a private university in the Midwest, who asked to be unnamed due to the sensitive nature of the matter, said his father bought a total of $150,000 from last October to this January. His father, an employee of a big Chinese bank, borrowed identification cards from his coworkers to circumvent the $50,000 annual exchange ceiling, the student said. // so expect another huge burst of conversion January 2, 2017? 300,000 students in the US times $50,000 is 15,000,000,000, seems manageable though if all exchange the legal quota, no?

China needs more efforts in steel capacity cuts in H2 – Xinhua China reduced steel capacity by 13 million tonnes in the first half of 2016, about 30 percent of the planned cuts for the whole year, and capacity cuts will intensify in the second half, a senior official said here Monday. The progress in the first half of this year “was in line with our expectations,” and “we remain confident that we will fulfill our capacity cut targets for 2016,” Feng Fei, vice minister of industry and information technology, told a press conference.

China’s Tibet comes on top of regional GDP growth in H1 – Xinhua Tibet came top of 25 Chinese provinces and municipalities that had released their half-year GDP growth figure as of Monday, thanks to investment in infrastructure and local industries. The economic growth of Tibet Autonomous Region was 10.6 percent during the first half this year, extending a 23-year streak of double digit growth and up 3.9 percent points from the national average in the same period.

Lou Jiwei: help but not bailout_Top Insights | Xinhua Asia Pacific Daily Violations of contracts are increasingly seen in the iron & steel and coal industries in China since 2016 with some central state-owned enterprises (SOEs) involved too. What’s the role played by central finance in removing risks of SOEs? China’s Finance Minister Lou Jiwei responded as “Help but not bailout!” at the 2016 G20 meeting of finance ministers and central bank governors held on July 23-24. Lou remarked that though enterprises see high debt ratio and also several cases of violations of contracts now, no systemic and regional risks outbreak. Public finance will not get involved until systemic risks arise and possibly result in huge economic loss.

Draft of real estate tax law expected to unveil in 2017, tax rate a concern | Xinhua Asia Pacific Daily At the High-level Tax Symposium of the G20 Finance Ministers and Central Bank Governors Meeting held on July 23, Lou said it is regret that reforms on real estate tax and individual income tax have not been introduced, due to weakness in information gathering and hindrance from interested parties. But he indicated that China will “proceed without hesitation on this issue”. China Business News learnt that draft on real estate tax law currently is still under preparation, and there are many difficulties to be addressed

国家队基金周年账单：熊市中赚39亿(附最新调仓动向)_证券时报网5 funds of the “state bailout” of the stock market last year have made a combined 3.9B RMB? // 2015年7月，证金公司宣布以2000亿元申购5家基金公司旗下基金，5只400亿元规模的国家队基金相继成立，分别是华夏新经济、嘉实新机遇、南方消费活力、易方达瑞惠和招商丰庆A，其举手投足无不吸引着市场投资者的目光。 截至目前，5只国家队基金已运行近一年，在A股震荡向下的大背景下，5只基金的成绩单如何呢？另外，基金二季报已披露完，5只基金又有哪些调仓动作？

China Bank to Turn $1.6 Billion of Bad Debt Into Securities – Bloomberg Agricultural Bank of China Ltd. is planning China’s largest sale so far under a trial program for lenders to offload bad loans by packaging them up as asset-backed securities. The lender plans to sell securities backed by 10.7 billion yuan ($1.6 billion) of nonperforming loans on the interbank bond market, it said July 22 on the Chinese bond clearing house website.

G20’s deference for China’s economic policies irks Japan | Reuters While the world’s second-largest economy has slowed and the yuan has fallen to 5-1/2 year lows against the dollar over the past five months, G20 finance ministers and central bank chiefs appeared more concerned about the fallout from Britain’s June vote to leave Europe. “We have been very polite with China,” said a European official at the meeting in the southwestern Chinese city of Chengdu, adding Tokyo failed to keep its concerns about China’s economic performance – a major risk for Japan – on the table. “China’s growth problems and exchange rate decline have not been much of an issue here. Japan with its concerns has been left a bit alone, no one wanted to join in,” the official said.

POLITICS AND LAW

Xi’s China: The rise of party politics — FT.com One foreign government official who recently visited Mr Liu [He] says the president’s adviser is worried about the Chinese economy’s prospects. “He told us not to believe the people who say it’s spring in China again. It’s still winter. “Our meeting with him was in English without translation and he was surrounded by overseas-educated staffers,” the person adds. “It was like meeting with a group of Americans except they were all members of the Chinese Communist party.”

Top Chinese economic fugitive to return after 13 years for medical treatment – People’s Daily Online China’s most wanted economic fugitive, Yang Xiuzhu, has been reported to have given up her application for political asylum in the United States, and wishes to return to China as soon as possible. Yang, being held at Houston Immigration Detention Center in Texas, said she hoped to return to China to get access to better medical treatment, according to a recent report by World Journal, the largest Chinese language newspaper in the United States.

5th official suspended after deadly floods in Hebei – Xinhua Public outrage is mounting as many say they were not informed of the impending floods, and that officials had failed to organize evacuation before the flood crested. Guo Tongheng, deputy Communist Party of China (CPC) chief of Wangkuai Township, which is in the economic development zone of Xingtai, the worst-hit area, has been suspended, the CPC Xingtai Municipal Committee announced Monday.

浙大原副校长褚健案延审5次，辩方坚持无罪再次申请取保候审国内新闻环球网 7月25日，浙江大学原副校长褚健的辩护人、北京泽博律师事务所律师周泽，向湖州市中级人民法院提交了《取保候审申请书》，申请对褚健取保候审。当天，周泽还向湖州市检察院递交了《关于对褚健进行羁押必要性审查的申请书》，希望该院建议湖州市中级人民法院对褚健予以取保候审。 // former deputy head of Zhejiang University been detained for three years, still no trial, strange case

FOREIGN AND DEFENSE AFFAIRS

Tsai Center Paper: Roy on the Changing Geopolitics of East Asia – Yale Law School The United States is facing a new set of challenges in East Asia. China’s rapid economic development over the last three and a half decades has transformed its position in East Asia and the world. Its growing economic strength, military capabilities, and political influence are giving the United States a run for its money in a region of the world where we have been the dominant power for the last seventy years. In the past our dominance was sorely tested by wars in Korea and Vietnam. More recently, it has been an important factor underpinning the stability in East Asia that has permitted most of the countries of the region to focus on economic development rather than military buildups. That era may be ending as China continues to expand its military footprint in the western Pacific–Ambassador J. Stapleton Roy

How the GOP Stopped Loving China | The National Interest Blog This background brings us to the just-announced 2016 GOP platform. No longer is China’s rise welcomed or even offered the “democratic conditional.” The language has taken a sharp turn. “China’s behavior has negated the optimistic language of our last platform concerning our future relations with China. The liberalizing policies of recent decades have been abruptly reversed, dissent brutally crushed, religious persecution heightened, the internet crippled, a barbaric population control two-child policy of forced abortions and forced sterilizations continued, and the cult of Mao revived.”…To add to this “Chinese reversal,” the platform condemns China for asserting “a preposterous claim to the entire South China Sea,” reclaiming islands, building “landing fields in contested waters” and “building a navy far out of proportion to defensive purposes.” All of these transgressions are said to be a result of “the complacency of the Obama regime” and its “unilateral approach to disarmament.” The platform finds particularly offensive China’s 2015 Victory Day parade, which celebrated the seventieth anniversary of China’s defeat of Japan in WWII, its first such celebration. To add to it all, “cultural genocide continues in Tibet and Xinjiang, the promised autonomy of Hong Kong is eroded, the currency is manipulated, our technology is stolen, and intellectual property and copyrights are mocked in an economy based on piracy.”

Billionaire Li Drops Bid for Baidu’s Netflix-Like Video Unit – Bloomberg An investor group led by Li and Qiyi.com Inc. Chief Executive Officer Yu Gong offered to buy out Baidu’s 80.5 percent stake in February – a deal that conferred a $2.8 billion enterprise value on the Netflix-like service. The pair informed the board they’re retracting that offer after failing to strike a deal despite several rounds of discussions, Baidu said Monday.

ENERGY, ENVIRONMENT, SCIENCE AND HEALTH

China confirms first imported Rift Valley Fever case – Xinhua A 45-year-old man from Henan Province began to suffer fever, headaches, joint and muscle pains in Angola on July 14, the National Health and Family Planning Commission (NHFPC) said Sunday. On July 21, he returned Beijing and was admitted to hospital for quarantine and treatment. On Saturday evening, he tested positive for RVF.

China’s Sansha launches maritime ecological protection fund – Xinhua China’s Sansha city has decided to allocate 5 million yuan (about 748,000 U.S. dollars) annually for maritime environmental conservation in the next three years. A first round of special environmental funding worth one million yuan was earmarked Saturday for exploration of the newly confirmed world’s deepest underwater sinkhole, or blue hole, in the Xisha Islands. The blue hole in Yongle, a major coral reef, is 300.89 meters deep. It is known as Longdong, or “Dragon Hole.”// too little too late for many areas?

Is China using organs from executed prisoners? Researchers debate issue in the literature – Retraction Watch at Retraction Watch A researcher is calling for the retraction of a paper about a recent ban in the use of organs from executed prisoners in China, accusing the authors of misrepresenting the state of the practice. In April 2015, a paper in the Journal of Medical Ethics welcomed the ban by the Chinese government as “a step in the right direction,” but noted that China remains plagued by a crucial shortage in available organs. Some academics disagreed with the authors’ take on the issue, noting that the paper fails to note that many organs may continue to be harvested from Chinese prisoners of conscience; ultimately, the journal received a letter asking to retract the paper. The journal decided not to, and instead asked the authors to issue a lengthy correction, for instance changing the language about the government decision (“law” became“guideline”), and allowed critics to publish a rebuttal to the paper in May 2016.